Question

The Mann Corporation began operations in 2011. Information relating to the company's purchases of inventory and sales of products for 2011 and 2012 is presented below.

2011

February 1 Purchase 200 units @ $20 per unit

May 1 Sold 120 units @ $50 per unit

August 1 Purchase 100 units @ $28 per unit October 1 Sold 130 units @ $50 per unit

2012

February 1 Purchase 100 units @ $32 per unit May 1 Sold 80 units @ $60 per unit

August 1 Purchase 100 units @ $36 per unit October 1 Sold 100 units @ $70 per unit

Calculate the LIFO cost of goods sold and ending inventory for 2011 and 2012 assuming use of (a) the periodic method and (b) the perpetual method.

Answer 1

		(a)	LIFO COST OF GOODS SOLD PERIODIC METHOD
		Date	Beginning Inventory			Purchase			Sales			Ending Inventory
			Quantity	Rate	Amount	Quantity	Rate	Amount	Quantity	Rate	Amount	Quantity	Rate	Amount
		Feb1,2011	0			200	$20	$4,000				200	$20	$4,000
		May1,2011	200	$20	$4,000				120			80
		August 1,2011	80			100	$28	$2,800				180
		October1,2011	180						130			50
		December31,2011	50	$20	$1,000							50	$20	$1,000
		TOTAL				300		$6,800	250
		January1,2012	50	$20	$1,000							50	$20	$1,000
		Feb1,2012	50			100	$32	$3,200				150
		May1,2012	150						80			70
		August 1,2012	70			100	$36	$3,600				170
		October1,2012	170						100			70
		December31,2012	70									70
		TOTAL				200		$6,800	180
		YEAR 2011	Units
	A	Beginning Inventory	0
	B	Purchase	300
	C=A+B	Total available	300
	D	Sale	250
	E=C-D	Ending Inventory	50
		LIFO Cost of ending Inventory	$1,000	(50*20)
			Amount
	A	Beginning Inventory	$0
	B	Purchase	$6,800
	C=A+B	Total available	$6,800
	D	Ending Inventory	$1,000
	E=C-D	Cost of goods sold	$5,800
		YEAR 2012	Units
	A	Beginning Inventory	50
	B	Purchase	200
	C=A+B	Total available	250
	D	Sale	180
	E=C-D	Ending Inventory	70
		LIFO Cost of ending Inventory	$1,640	(50*$20+20*$32)
			Amount
	A	Beginning Inventory	$1,000
	B	Purchase	$6,800
	C=A+B	Total available	$7,800
	D	Ending Inventory	$1,640
	E=C-D	Cost of goods sold	$6,160
		(a)	LIFO COST OF GOODS SOLD PERPETUAL METHOD
		Date	Beginning Inventory			Purchase			Sales			Ending Inventory
			Quantity	Rate	Amount	Quantity	Rate	Amount	Quantity	Cost/unit	Amount	Quantity	Rate	Amount
		Feb1,2011	0			200	$20	$4,000				200	$20	$4,000
		May1,2011	200	$20	$4,000				120	$20	$2,400	80	$20	$1,600
		August 1,2011	80	$20	$1,600	100	$28	$2,800				80	$20	$1,600
												100	$28	$2,800
		October1,2011	80	$20	$1,600				100	$28	$2,800	50	$20	$1,000
			100	$28	$2,800				30	$20	$600
		December31,2011	50	$20	$1,000							50	$20	$1,000
		TOTAL				300		$6,800	250		$5,800
		January1,2012	50	$20	$1,000							50	$20	$1,000
		Feb1,2012	50	$20	$1,000	100	$32	$3,200				50	$20	$1,000
												100	$32	$3,200
		May1,2012	50	$20	$1,000				80	$32	$2,560	50	$20	$1,000
			100	$32	$3,200							20	$32	$640
		August 1,2012	50	$20	$1,000	100	$36	$3,600				50	$20	$1,000
			20	$32	$640							20	$32	$640
												100	$36	$3,600
		October1,2012	50	$20	$1,000				100	$36	$3,600	50	$20	$1,000
			20	$32	$640							20	$32	$640
			100	$36	$3,600
		December31,2012	50	$20	$1,000							50	$20	$1,000
			20	$32	$640							20	$32	$640
		TOTAL				200		$6,800	180		$6,160
		YEAR 2011	Amount
		LIFO Cost of ending Inventory	$1,000	(50*20)
		LIFO Cost of goods sold	$5,800
		YEAR 2012	Amount
		LIFO Cost of ending Inventory	$1,640	(50*$20+20*$32)
		LIFO Cost of goods sold	$6,160